AMA wants court to block Aetna-Humana merger

As the Aetna and Humana merger trial opens today on their $37 billion proposed deal, the American Medical Association has said the court should prevent the insurers from cornering the market in Medicare Advantage.

"A court injunction would prevent Aetna from eliminating head-to-head competition with rival Humana in highly concentrated public exchange markets for the sale of individual insurance in numerous counties across Florida, Georgia and Missouri," said
AMA President Andrew W. Gurman, M.D. "Blocking this merger would also protect elderly Americans by preventing Aetna from cornering the Medicare Advantage markets."

A combined Aetna and Humana would create what the AMA called an "insurer Goliath" that would have the market power to raise premiums, lower plan quality, and eliminate choice.

AMA analysis shows the merger would reduce competition in 19 states where the two companies overlap, Gurman said.

[Also: Humana pays out more than $93M to providers under quality rewards program]

In July, the Department of Justice blocked Aetna from buying Humana, and also brought an injunction against the $54 billion merger between Anthem and Cigna.

The first part of the Anthem/Cigna trial was held over the past two weeks, with no decision yet issued on the national ramifications of the deal. The second half of the trial on regional implications could be held later this month.

Unlike Anthem and Cigna, Aetna and Humana are not bickering over their deal. The court battle is expected to hinge on whether Medicare Advantage is a separate product from Medicare, and how that affects competition within markets.

Industry experts predict this merger has a better chance of going through than the Anthem and Cigna consolidation.

[Also: Analysts are split on how Trump presidency will impact Anthem-Cigna, Aetna-Humana mergers]

The AMA said it believes Medicare Advantage is a separate market, a view that aligns with that of leading economists.

"The AMA stands by the conclusion that Medicare Advantage is a distinct product market where competition is important and Aetna's argument to the contrary - that it competes with the federal government offering traditional Medicare - is a flawed defense of a highly anticompetitive merger," Gurman said.

Twitter: @SusanJMorse